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An investment pays 21% interest compounded weekly what percent as a decimal is the effective annual yield? Enter your answer as a decimal rounded to four decimal places.

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sqdancefan

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Answer:

  0.2332

Step-by-step explanation:

The relationship between the effective annual yield (e) and the nominal annual interest rate (r) compounded n times per year is ...

  e = (1 +r/n)^n -1

For weekly compounding, we have n=52, so ...

  e = (1 +0.21/52)^52 -1 = 0.2332 . . . . . . . about 23.32%

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